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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of DaVita HealthCare Partners Inc was -0.76. The lowest was -3.52. And the median was -2.61.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of DaVita HealthCare Partners Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9331||+||0.528 * 1.0445||+||0.404 * 0.9432||+||0.892 * 1.1209||+||0.115 * 0.9981|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9654||+||4.679 * -0.0588||-||0.327 * 0.9597|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,469 Mil.|
Revenue was 3251.824 + 3172.489 + 3042.776 + 3063.209 = $12,530 Mil.
Gross Profit was 925.29 + 925.951 + 863.004 + 935.377 = $3,650 Mil.
Total Current Assets was $4,178 Mil.
Total Assets was $18,101 Mil.
Property, Plant and Equipment(Net PPE) was $2,359 Mil.
Depreciation, Depletion and Amortization(DDA) was $576 Mil.
Selling, General & Admin. Expense(SGA) was $1,224 Mil.
Total Current Liabilities was $2,598 Mil.
Long-Term Debt was $8,381 Mil.
Net Income was 184.122 + 147.683 + 183.289 + 212.278 = $727 Mil.
Non Operating Income was -1.246 + -95.855 + 1.698 + 3.45 = $-92 Mil.
Cash Flow from Operations was 847.9 + 262.391 + 419.107 + 354.187 = $1,884 Mil.
|Accounts Receivable was $1,404 Mil.
Revenue was 2999.586 + 2871.673 + 2829.582 + 2477.853 = $11,179 Mil.
Gross Profit was 904.252 + 857.353 + 868.691 + 770.394 = $3,401 Mil.
Total Current Assets was $3,381 Mil.
Total Assets was $16,827 Mil.
Property, Plant and Equipment(Net PPE) was $2,048 Mil.
Depreciation, Depletion and Amortization(DDA) was $499 Mil.
Selling, General & Admin. Expense(SGA) was $1,131 Mil.
Total Current Liabilities was $2,453 Mil.
Long-Term Debt was $8,181 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1468.563 / 12530.298)||/||(1404.05 / 11178.694)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(925.951 / 11178.694)||/||(925.29 / 12530.298)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (4178.435 + 2359.203) / 18101.416)||/||(1 - (3381.408 + 2048.235) / 16827.319)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(498.927 / (498.927 + 2048.235))||/||(576.067 / (576.067 + 2359.203))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1224.346 / 12530.298)||/||(1131.431 / 11178.694)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((8380.903 + 2597.631) / 18101.416)||/||((8181.434 + 2453.126) / 16827.319)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(727.372 - -91.953||-||1883.585)||/||18101.416|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
DaVita HealthCare Partners Inc has a M-score of -2.69 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
DaVita HealthCare Partners Inc Annual Data
DaVita HealthCare Partners Inc Quarterly Data